MooMaker introduces framework for individual market makers to price CoW swap user orders through offchain signed bids. A designated CoW solver receives batch data and sends request to makers to swap particular tokens launching an offchain auction. During auction makers submit their EIP-712 signed bids and the best bid is displayed to solver as a solution which he may pick as the best one to pass to CoW driver.
Purpose of MooMaker:
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Provide a direct way for market makers to price COW orders with optimized smart contract infrastructure for efficient COW-MM settlement. Current flow for solvers might include RFQ systems like Hashflow that may not be optimized for COW batch settlement due to issues of timing and latency. MooMaker introduces an RFQ like system that is directly compatable with existing CoWswap flow ensuring stability of fills.
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Proffesional market makers on centralized exchanges who have high fee tiers are normally able to provide very attractive prices to onchain traders due to their ability to effectively hedge each trade on their side. By providing a last second auction, MooMaker aims to provide market makers with a low latency trading experience which would encourage tight spreads and less exposure to toxic flow.
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Currently AMM pools are the main liquidity source to settle any unmatched orders on CoW. Settling with AMM protocols may not be optimal at all times due to gas costs, limited locked liquidity in the pool,..etc. MooMaker gives an opportunity for a different type of liquidity to exist as an alternative which represenst the most active type of liquidity provision usually found on centralized exchanges.
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Open offchain auction design creates competition among market makers as they see every quote provided by each maker. This gives them the stimulus to outbid each other deriving the best possible price for cow user. Semi-private auction designs are still being researched that would deliver the optmimum experience for the market makers.
Key components used:
- Trader on CoW submits his limit order. Batch is formed by the COW driver and sent to solver as POST request to find the best available path to settle the trade(s) of the batch.
- Solver passes data on tokens that require swap to MooMaker offcahin service
- Offchain service initiates a MooAuction (English Auction) with
time_limit(sent along request by the COW driver) as deadline and informs all connected market makers (MMs) about the list of trades in the batch that require onchain settlement - MMs submit their EIP-712 signed bids through websocket to MooMaker offchain service
- The best quote out of all provided is displayed to solver as the best solution that he may pick to offer CoW driver as a path
- If accepted as the best solution, CoW driver will activate MooMaker smart contract swap function which will check validity of signed quote and execute swap by transfering tokens between the winning MM and CoW driver.
